The important news here is that video games are surpassing other forms of entertainment. It is evidence of the disconnect between the media, politics and actual society: every other month you get discussions about video games causing violence and calls for legal restrictions. Compare this to movies, where you can produce the most violent splatter horror trash and nobody will bat an eye.
Meanwhile, people are validating games as the work of art they are with hard dollars.
I agree that art takes care of itself. As much as I believe that some video games are works of art, I could not care less if there is nobody else in world that agrees with me.
Not that I've seen. They went from the "the Columbine kids played Doom which is why they killed those people" more recently to "Guns kill people; We must get rid of guns", but even that is no longer in the news. The latest in the news is that conservatives want to shutdown the government and make poor people die without health care. But nothing about games.
If they want bad publicity to help sell it, they'll need to have something like beastiality with a donkey hidden deep in the game somewhere.
So the comparisons to other industries are misleading in one sense and deeply revealing in another.
Movies spread out their sales over an extremely long time compared to games. This means that box office numbers will be smaller. This ALSO means that they are not serving many markets that could bring them revenue off the bat.
Games that don't release on all platforms simultaneously have a similar problem, but nowhere near that of movies which refuse to let people watch them in their preferred format from the start.
> Movies spread out their sales over an extremely long time compared to games.
Is that true? It seems like most hundred-million-dollar movies make most of their money on opening weekend, and after a couple of weeks their (domestic) box office is basically finished. I'd expect GTA V to keep selling for a while. The Wikipedia page for GTA IV says it sold approximately 6 million copies in the first week, and 25 million copies total.
I suspect Disney may be atypical in that regard. People are constantly having kids for the first time, and there is then a steady stream of people buying movies for their kids that they know kids like. Most other genres probably have not enjoyed much of that.
Most of the value in old movies, going forward, is probably going to be in padding streaming libraries for Netflix/etc to license. Will Goodfellas itself worth much currently and in the future? Probably not; anybody who wants that on DVD probably already has it on DVD. A streaming library that includes movies of the caliber of Goodfellas though? That is probably worth a hefty chunk of cash.
Also, classic games do get "HD refreshes" to re-release them for new media. How many times has Super Mario 1 been updated?
Also, today's movies seem to eschew the kind of prioritizing that would create timeless classics you'll still watch in 10 years - I mean, I enjoy today's movies - I'm no snob. But the writing is utter crap. Seriously, how do you drop 9 figures on making a film and cock up the script so thoroughly?
Which is why streaming tv boxsets is the real cash cow at the moment. Lots of people missed the 100 odd hours of The Wire, Sopranos, 6ft under, 24 etc. That's what really keeps the eyeballs on box.
True, but I suspect that doesn't massively prolong most movies, only big ones that people are passionate about (Star Wars, The Godfather Trilogy, etc).
Just randomly picking... 2004. Top 10 movies from that year, and pulling future media sales predictions out of my ass:
Shrek 2 kids movie, profitable regardless.
Spider-Man 2 probably poor
The Passion of the Christ probably poor
Meet the Fockers nobody cares.
The Incredibles kids movie, profitable regardless.
Harry Potter and the Prisoner of Azkaban great.
The Day After Tomorrow nobody cares.
The Bourne Supremacy possibly good.
National Treasure nobody cares.
The Polar Express nobody cares.
I mean, I am sure all of these will have future releases on new media. There is no reason not to re-release movies, it is essentially printing money), but will many of them see dramatic sales that will really change how we view the profitability of those movies? Meet the Fockers was a good movie, but nobody is going to give a shit if you re-release it in 3D, 4K resolution, "hyperdisk". Only a few have that potential I think, and it gets more bleak if you stop looking at the top 10.
After the initial burst of home media sales, I just don't see most movies getting anything more than a trickle of revenue. For every movie like Office Space, there are dozens that aren't.
I don't think that either GTA or most movies targeted to adults have the sort of longevity that Disney movies have. I therefore think that it is fair to compare GTA to blockbuster movies (or at least I think that Disney isn't a reason why it isn't).
Well, check out any of the Nintendo/Playstation/Xbox online stores. They all contain games from the 90s that you can buy for $5-10 a pop.
Furthermore, I would think (I don't have any sources so this is just a guess) that with DVD sales plummeting, and the comparative ease of pirating movies as opposed to console games, that DVD sales would account for very little in the long run. However, I still see old video games at Black Friday events that sell out like crazy.
That game is Hard. I couldn't finish it when i was 17 years old and have been playing games for 10 years. It is definitely different from today's licensed games.
Big movies also have huge marketing costs to recoup. The real money comes on the DVD sales. There's an adage in the industry that the theatrical release is the marketing campaign for the DVD.
And if it is true, why is it the case? I can't think of any particular reason why sales of one medium would gather closer to the release date than another medium. =
The movie industry is different because their products only last a couple of hours and repeat viewing is minimal. Cinemas need exclusivity in order to justify the premium. Then you get a quick home video version. Then a rental. Perhaps a collectors' edition to cash-in on enthusiasts and fans. After that, pay TV. Free-to-air channel premières. Finally, when no one is willing to pay any further, there's all-you-can-eat streaming.
Yep. I absolutely agree. Games have only started to explore 'alternate' monetization schemes. DLC was on my mind as I was writing my comment. In one sense DLC makes games more like serialized television rather than the (supposedly) complete and self contained experience of a movie. Alternately DLC is an opportunity to deepen the experience of players, something that movies and television cant really do.
These sorts of comparisons are pretty meaningless without inflation adjusted numbers. That's why films break box office records year, after year, after year.
Well, games have been around for a far shorter time period than movies, so you're not comparing games from 1920 to games from today (and thus the overall effect of inflation is lower). Also, since the former #1 game (BLOPS 2) came out just a couple of years ago, and GTA V beat it by 60% on launch ($800m to $500m), inflation didn't play a significant role.
That just takes the argument in circles since the former #1 might not have been the inflation adjusted #1. It may be the case since "launches" weren't always such a big deal.
Box prices for video games have been remarkably static. New games were selling for $60 in 1993, just like GTA V is today instead of the inflation-adjusted equivalent of $97.
With DLC and other bells and whistles tacked onto many games these days that would have normally been part of the core game, the base price quickly inflates to be more in line with inflation.
Though it should be pointed out that GTA V has launched without any DLC to speak of. I'm sure they'll do it eventually as they did for GTA IV and Red Dead Redemption, but the DLC for those two games was more akin to an expansion pack.
>"With DLC and other bells and whistles tacked onto many games these days that would have normally been part of the core game, the base price quickly inflates to be more in line with inflation."
1.) Assertions about what "would have been part of the core game" are certainly popular, but not necessarily true or provable and certainly not universally applicable.
2.) Standard new game price held steady at ~$60 through three console generations prior to common place DLC. If inflation had been taking its toll we'd have been looking at $85 games prior to "horse armor".
It's not meaningless unless there is some claim like "the purchasing power of the money earned by this game is greater than that of some other game/movie." I don't see any such claim.
But besides, the movies and games it's being compared to are no older than 4 years, so I don't think it's a huge problem.
Another sucker duped by official numbers. Ask yourself, "What happens when nearly all the central banks in the western world print tons of money?" Then follow that line of reasoning and look at how official inflation figures are constructed. Then ask if there is a descrepancy. Bottom line, go do some homework on inflation.
Which part of the Billion Price Project's methodology do you disagree with? Its measure of inflation agrees with the BLS's pretty closely. http://bpp.mit.edu
Which measure of inflation do you prefer over those two, and where can we examine its methodology?
Isn't that assuming a static level of wealth/production? Wealth/Production output isn't a zero sum game, it's not some pie you keep cutting into smaller slices. It can grow over time and even if you increase the number of slices cut, each slice can retain the same relative mass. It's when these don't match up that you find yourself with an inflationary or deflationary currency.
Yes, you can and do cause inflation by printing more money, but it's not as simple as you assert it to be, and it certainly doesn't warrant the rudeness to the parent.
Besides a massive marketing budget (which obviously paid off), I have to imagine it took a small army of modellers and artists to actually make that game world. From what I have seen it blows other 'large world' games out of the water. Much smaller than Just Cause 2's for instance, but in another fucking solar system in terms of detail and limited repetition.
Okay, so a LOT went into marketing. But there is a significant development budget too... I was astounded as well, until I played it.
The graphics are, as you say, very good. But what the money has clearly gone into is the production value. Cut scenes, animation, map, all of it is very high quality. That's pretty revolutionary attention to detail - especially over such a large map.
I have the game and the complexity is amazing. It's really like a dozen video games in one. The cars and driving alone could be a $60 title. Add a world-class third-person shooter, the biggest map ever, hundreds of characters, thousands (millions?) of items, and you can see where the cost starts to build up. Then consider that each mini game, while built on the same graphics engine, requires a ton of custom logic and visual work. There's tennis, biking, stock trading, you name it. Then of course you have a sizeable marketing budget ... suddenly $260M seems OK.
As others have mentioned, 50% of it is marketing. I am curious though, have you played it? The reason I ask is if you have, it may be fairly obvious where the money has been spent.
RIght but as jamesaguilar above said, content does. I imagine it's linear, as the increasing marginal communication cost of a large team is probably canceled out by increasing efficiency of toolchain and reuse of sub-components.
See, this comment is exactly what I think is wrong with programmers in general. We all spend much of our time learning all the nooks and crannies of software engineering and then we think we've reached some kind of enlightenment and that we all are unique snowflakes.
Seeing programming, which often is named as 'creative work' described as something that's harder to distribute among many people than crating an entire fucking island from scratch is just downright ridiculous.
Yes, programming is hard. Crating entire fucking worlds from scratch is even harder.
It's not a matter of "hardness" it's a matter of system interconnectedness. 10 programmers working for 10 hours creates far less value than 1 programmer working for 100, because the whole system is interconnected and they need to spend a lot of time making sure their parts line up with the rest. 10 artist working for 10 hours might be worth close to 1 artist working for 100 hours If the work is "make an area with trees, roads, and wildlife"
There are bits on the island that need to connect, like the literal roads. Conceptually the mission content needs to line up with the graphical content. But it's not as interconnected as a chunk of software is, and the marginal returns don't decrease as fast.
He's right though. As someone with 10+ years game industry experience it's obvious. You can't just add a bunch of programmers and finish your game faster because they don't scale up that way.
But if you have content, content is easy to split up. Instead of each designer doing X items, dungeons, neighborhoods, cars, whatever, they just do a fraction of X. It scales so much better.
* Programming (all kinds - from model behavior to
game logic to AI to net code, backend, etc)
* 3D Modeling
* Texturing
* Art
* Scripts (as in narrative)
* Music and sound effects
* Voice recording by professional actors
* Motion capture of actors
* QA
* Sys admins
* Product and project managers
* All kinds of executives got paid a shit ton for making decisions
* Equipment for all of the above
* Software licenses
* Advertising
* Packaging
I dont agree. Proper marketing can sell you almost anything. Even so-so products. And its not rare to see not so good games make it to top 10 sales. The game quality can vary but to sell a lot you can be sure marketing is the decisive factor.
>>because it implies that marketing is more important than the development effort.
It doesn't imply such a thing.
You can think of marketing as a force multiplier. If the developed product is shit, it doesn't matter how well it's marketed because it will never sehahahahahah I can't even say that with a straight face.
If you look at the entire system, its sad for me to think that companies spend 60% of their budget to fight for attention between each other.
Its not Rockstar's fault or shortcoming, but its a problem in how things are done in general.
In the form of a story: Company A and Company B compose an entire economic system, and each build a product with 100% budget.
Company A falls behind in sales to Company B for a variety of reasons, of which luck could be one of them. So to get more awareness and better sales, they take 10% of their budget and put it into marketing the product.
Now they get ahead in sales, and are very happy. Company B figures this, and now uses 20% of the budget, to overcome Company A.
They will keep racing on marketing and presence as long as they can build the product and stay afloat.
So production is decreasing in proportion to available resources. In absolute terms, we'd have to answer the question of "is marketing making the pie larger" and if so by how much.
Not really. This quote explains it well, even though it's talking about pharmaceutical companies:
>Company X spends, let's say, $10 a year on research. (We're lopping off a lot of zeros to make this easier). It has no revenues from selling drugs yet, and is burning through its cash while it tries to get its first on onto the market. It succeeds, and the new drug will bring in $100 dollars a year for the first two or three years, before the competition catches up with some of the incremental me-toos that everyone will switch to for mysterious reasons that apparently have nothing to do with anything working better. But I digress; let's get back to the key point. That $100 a year figure assumes that the company spends $30 a year on marketing (advertising, promotion, patient awareness, brand-building, all that stuff). If the company does not spend all that time and effort, the new drug will only bring in $60 a year, but that's pure profit. (We're going to ignore all the other costs, assuming that they're the same between the two cases).
>So the company can bring in $60 dollars a year by doing no promotion, or it can bring in $70 a year after accounting for the expenses of marketing. The company will, of course, choose the latter. "But," you're saying, "what if all that marketing expense doesn't raise sales from $60 up to $100 a year?" Ah, then you are doing it wrong. The whole point, the raison d'etre of the marketing department is to bring in more money than they are spending. Marketing deals with the profitable side of the business; their job is to maximize those profits. If they spend more than those extra profits, well, it's time to fire them, isn't it?
>R&D, on the other hand, is not the profitable side of the business. Far from it. We are black holes of finance: huge sums of money spiral in beyond our event horizons, emitting piteous cries and futile streams of braking radiation, and are never seen again. The point is, these are totally different parts of the company, doing totally different things. Complaining that the marketing budget is bigger than the R&D budget is like complaining that a car's passenger compartment is bigger than its gas tank, or that a ship's sail is bigger than its rudder.
R&D is just a cost. What brings money in is sales and marketing. You dont just sell a product because its 'out there', you need to spend considerable efforts to make it look valuable to all potential customers. Of course its more important than development, because it brings money in. Thats why even shitty games sell relatively well.
To me this says systems for quantizing game quality needs to catch up to marketing. There will be more money flowing into top quality developers if the quality of development can be measured as ROI.
Right because Minecraft's success has been because of that massive marketing campaign by Mojang. It depends. Marketing works sometimes, and sometimes you don't need it.
I think it is marketing is need most of the time, sometimes it isn't. Have a look around you at all the marketing that is going on. Even on this website.
It should it shouldn't. Should make you sad because the quality of work should stand on it's eon, shouldn't because consumers require marketing to be encouraged to spend money. Films have often had large marketing spends for a while, the games industry is catching up.
This article reads like an advertisement. You'd think Forbes would spend a little bit more time polishing up those press releases into something that they could at least pretend was journalism.
This is not a Forbes article. Forbes have a blogging platform that anyone can apply to publish on, this article was written by an unpaid contributor. Note "contributor" next to the author name.
The only difference between a staff post and a contributor is that one line by their name. If Forbes didn't want me to associate their name with the content they would have distinguished it better.
Same problem with TED's TEDx conferences. Why do so many brands want to throw away their cachet by stamping their name on random contributors' content?
Because some distributed content generation platforms like YouTube, the Huffington Post, Bleacher Report, and others have proved to be enormously successful and popular, so other content companies have tried to emulate that success?
And yet every news release about the game mocks the horrific violence of the game and the neckbeards that play it. The generation and cultural gap between the news media and today's youth, especially young men, is astounding.
Unfortunately most single player games have devolved into this. It's hard and risky to develop novel gameplay rather than just building an interactive movie around tried-and-true game mechanics (run & gun). Most gamers are ok with this, just like most moviegoers are ok with franchise films (sequels/reboots/remakes).
Media are just converging toward low-risk, formulaic, and consistently profitable goods. It happens at a speed inversely proportional with the complexity of the medium: music has been manufactured for a while, more recently movies, now games. Novels have proven trickier thus far. Readers seem to appreciate originality more and are more discerning, with a lot of surprise hits (and failures). It's only a matter of time before that formula is cracked though.
If you had a more fair look at things, I think you'd find that the rich diversity and sheer amount of music, film and written word available to you today is greater than at any point in history.
I can only assume that you either just don't know very much about music or you are mixing up "media" with "the top players in the media industry"
I think you hit the nail on the head. Being able to choose your own adventure has been captivating even without the visuals. Zork was captivating using ASCII, this even more so.
33 Million units at ~$20 is $660 million in revenue. This isn't including development costs, which are low for Minecraft but not zero (I'm guessing $5-$10 million over its lifetime.) Subtracting GTAV's combined development and marketing budget of $265 million still puts it ahead of Minecraft at $735 million, and it still has a lot more runway left.
Minecraft PC sales are almost exclusively Mojang's money (except for merchant fees) except when it comes to the giftcards that can be purchased in stores like Target. Minecraft Xbox is a licensed product so it's fairly safe to assume that Mojang are sharing a non-negligible portion of the revenue with Microsoft. Pocket Edition is sold through mobile stores and developed by Mojang.
The Mojang and Notch AB financial records are public -- as it is the way Sweden works -- by the way, if for whatever reason you want to look into the money that they're making.
Heh, except the cost to develop is much lower. So they will probably never achieve the same level of profitability, even if they achieve better revenue.
I think it depends on what you mean by "level of profitability". In absolute terms (i.e. how many coins could you put in a money bin), it should be achievable; but as a percentage (i.e. how you would measure it as an investor) it likely won't get there simply because the expenses for creating Minecraft were relatively low.
I'm still confused by this though. Their market cap right now is about 1.5 billion. If GTA 5 sold $1 billion in 3 days, does that mean their whole valuation is based on this one single game??
Valuation includes liabilities and is generally focused on profits not revenue (Amazon excepted). Take-two ended up losing 32 million last year on 1.2 billion in revenue.
Take-two had a relatively large run up in July/August likely meaning that optimistic interpretations of GTA V were already priced in meaning people already factored the higher than normal profits this year.
Meanwhile, people are validating games as the work of art they are with hard dollars.